Death & Taxes 2022 by Volume One Magazine

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No t h i n g i s c e r t a i n i n l i f e , t h e o l d s a y i n g g o e s , b u t d e a t h a n d t a x e s . An d w e ’ l a d m i t t h a t , u n d e r m o s t c i r cumstances, neither subject is very uplifting to talk about. Th e y c a n b e p r e t y b o r i n g t o p i c s , t o : S k i m i n g t h r o u g h a s t a c k o f IRS p a p e r w o r k m a y m a k e y o u w i s h y o u w e r e d e a d , a n d t h a t ’ s e v e n b e f o r e y o u f i n d o u t w h a t y o u o w e . No n e t h e l e s , b o t h death and taxes – and the financial and legal intersection of the two – are critical topics for al of us. Making sure we’ve plan ed wel , financial ly and otherwise, can ease our anxiety and make our lives more comfortable a n d f u l f i l i n g … a t l e a s t u n t i l t h e i n e v i t a b l e h a p e n s . Un t i l t h e n , y o u ’ v e g o t t h i s . -

PLANNING AHEAD W H AT A R E P O W E R S O F AT T O R NE Y, A ND W H Y D O Y O U NE E D T HE M ? AN E AU CL AIRE AT TORNE Y E XPL AINS compiled and edited by

IT’S NO EXAGGERATION THAT MOST OF OF WOULD RATHER THINK OF ANYTHING ELSE THAN ABOUT MAKING CHALLENGING END-OF-LIFE DECISIONS. But those decisions inevitably will have to be made – either by ourselves or by others – and planning ahead can provide peace of mind and prevent future confusion and difficulty. In an episode of the Volume One-produced podcast Journey Ahead: Aging Well in the Chippewa Valley, Lisa Wells of the Eau Claire County Aging and Disability Resource Center chats with Eau Claire attorney Peter Grosskopf about a variety of end-of-life legal issues. In this excerpt from the podcast, Grosskopf addresses the difference between a health care power of attorney and a financial power of attorney, and why you need both. Lisa Wells: From your experience, why do people put off planning ahead? Peter Grosskopf: I think part of it is just normal inertia. You know, procrastination. They don’t want to deal with it. Thinking about having dementia or thinking about requir-

ing a power of attorney to manage your affairs is not something pleasant. So it’s easy to put off. I know when I was talking about it with my family years ago. Then it was more like, “Well, if we talk about it, then it’s going to happen,” right? There’s a lot of people who say that about wills, too, that they don’t want to do a will because it’s sort of like opening the door to death, which is, really not true at all, of course. Let’s talk a little bit about who really needs a power of attorney. Do we need it when we get older? Do we need it like when we get sick? Who who really needs one? I usually tell people that pretty much everyone over the age of 18 ought to have powers of attorney. And those include both health care or medical power of attorney as well as financial power of attorney. And one thing to remind people is there’s been a lot of famous cases about people who did not have powers of attorney – for example, Karen Ann Quinlan, Terri Schiavo, among others – and those were all

tom giffey

very young people who had not done any advance planning and wound up in terrible medical conditions that lasted for years and years and went through the courts for years and years. So anybody over the age of 18 should have a power of attorney for health care and finance. Let’s talk a little bit about what’s the difference? Well, the difference basically is the health care power of attorney, like it sounds, is for making health care or medical decisions. You can appoint an agent who can make those decisions for you. The financial power of attorney is to manage finances, and it has evolved over the years. It used to be that the financial power of attorney was limited to kind of specific circumstances, such as selling the house long distance when you couldn’t be on location, things of that nature. But it’s evolved into what’s called a durable power of attorney, and what the “durable”

part simply means is that it’s intended to remain in effect even after a person becomes incompetent. That has become extremely important now for planning for dementia, planning for that period of time when a person is not able to manage their finances. But equally important, I’ve got a lot of my older clients who simply don’t want to manage their finances anymore. They’re still competent. They just don’t want to do it. So they’d like to have somebody step in and help. So what are some questions on the power of attorney for health care? One of the important questions is, do you want to give your agent authority to have you admitted to a nursing home or community-based residential facility? And the reason I point that out is a couple of things. No. 1, a lot of people instinctively say, “No, I don’t want to go to a nursing home, so I’m going to check ‘no’ to that.” But you really want

| FEBRUARY 24, 2022

BROUGHT TO YOU IN PART BY to say “yes” to that, because if the time comes when you have to go to a nursing home or a community-based residential facility – like assisted living – then if you’ve said no to that and you’re not able to admit yourself, then the family will likely have to go to a guardianship and protective placement, which is a court procedure, which is much more time-consuming, it’s much more expensive, and it can be ongoing for years and years. So that’s why you really want to say “yes” to that. The other reason I point that out is because the Wisconsin power of attorney asks that question, but you could go to another state, for example, Minnesota or Illinois, and get a perfectly fine health care power of attorney from those states that simply don’t work in Wisconsin because they don’t ask those questions. Other questions that are asked in the health care power of attorney would be, for example, whether or not you want nutrition when the time comes, when you want feeding tubes. And there’s also a spot where you can put down your own statement of your preferences, desires, limitations, or restrictions. So those are some of the things that are asked.

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“THERE’S BEEN A LOT OF FAMOUS CASES ABOUT PEOPLE WHO DID NOT HAVE POWERS OF ATTORNEY ... WHO HAD NOT DONE ANY ADVANCE PLANNING AND WOUND UP IN TERRIBLE MEDICAL CONDITIONS THAT LASTED FOR YEARS AND YEARS AND WENT THROUGH THE COURTS FOR YEARS AND YEARS.” – P E T E R G R O S S K O P F, E A U C L A I R E AT T O R N E Y

Now we’ve talked about the power of attorney for health care. Can you talk about power of attorney for finance? And then the next question would be, there’s some confusion between power of attorney for finance and living will. Could you talk about the difference? Let’s talk about the living will first. With the living will, basically, this is a direct statement. From the signer or maker to their health care professionals on certain choices that have been made. In other words, a person can do this living will that says they don’t want to have fluids or

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they don’t want hydration, they don’t want feeding tubes, things like that. It’s a direct statement from that maker to the health care providers, and the advantage of that is that nobody has to make a difficult decision at a difficult time because the maker has already made that. The limitation on it is that it’s only usable under two circumstances, which are a terminal condition or a persistent vegetative state. And there are a lot of medical conditions which are neither one. So, for example, a person with Alzheimer’s or dementia typically is not considered to be in a terminal condi-

tion or certainly not a persistent vegetative state. And so there the living will would not have any application, in which case the person would really want to have the health care power of attorney. Now, it’s OK to have both the living will and the health care power of attorney, but you want to make sure that they’re not inconsistent with each other. So you suggest that people should have both. If a person comes to me with that question, I typically say, if you’re only going to have one, the one you want is the health care power of attorney, because it’s a much broader document, more usable in more circumstances. And that’s the one if you have to go to a nursing home, you want you need that one. So if you’re only going to have one, that’s the one you want. If you want to have both, which is not a bad idea, then certainly you can do both. But again, make sure they’re consistent and the living well. To hear more of this conversation, as well as other episodes of the Journey Ahead podcast, visit volumeone. org/podcasts or search for Journey Ahead in your podcast app of choice.

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BEYOND THE URN: 7 OPTIONS FOR ASHES S OME UNIQUE WAYS T O CE L E BR AT E THE LIVES OF THE ONES YOU’VE LOST words by

TRADITIONAL CASKET BURIALS CAN BE CLUNKY, EXPENSIVE, AND DOWNRIGHT TERRIBLE FOR THE ENVIRONMENT. That’s why more than half of Americans are now opting to be cremated after they die. Not only is it easy, but there are also cool and unique things to do with those ashes to celebrate the lives of the people we’ve lost. Here are seven options that are a little more interesting than just keeping those ashes in an urn. 1. MAKE ‘EM SPARKLE ... IN JEWELRY. Whether you have your loved one’s cremains pressed into a diamond or funneled into a capsule necklace, you can always have them with you when they’re made into jewelry. People have made rings, necklaces, bracelets, anything that gives those ashes a little pizzazz. 2. GET A TATTOO USING THEIR ASHES. No, I’m not talking about a self-portrait of them on your arm (unless

sawyer hoff you’re into that). Many tattoo artists are able to mix ashes in with the ink to create a beautiful tattoo that will be a permanent reminder of the ones you’ve lost. 3. SEND THEM OFF WITH A BANG. Hear me out: fireworks. Who doesn’t love fireworks? Sprinkle a few ashes in those dynamite sticks and watch their colorful lights explode in the sky. It’s a beautiful way to celebrate the lives of your loved ones. 4. LET THEM LIVE WITH THE FISHES. You could release their ashes into the ocean, but wouldn’t it be cooler to make them a living part of the ocean and help preserve marine life? Eternal Reefs, a Florida-based charity, creates environmentally safe reefs using your loved one’s ashes, which helps replenish the deteriorating population of reefs on the ocean floor. 5. SPIN A RECORD. Nothing helps with the pain of grief like listening to music. You can now do that knowing that they are a part of that music, since companies can now press ashes into working vinyl albums. We recommend going with something upbeat and staying away from Celine Dion, but that’s just us. 6. INVEST IN A PORTRAIT. Many artists can mix ashes into their paint and create beautiful portraits. I think I would want my ashes to create a Britney Spears portrait, but you could always get a portrait of the person who died. 7. SHOOT THEM INTO SPACE. Neil Armstrong once said, “One small step for man, one giant step for human remains” – or something like that. A company called Celestis has launched ashes into orbit for 20 years. | FEBRUARY 24, 2022

IT’S TIME TO CONSIDER YOUR TAX SITUATION HOW FEDER AL AND S TATE TA X CHANGES CAN IMPAC T YOU by

ADMIT IT – WHEN YOU THINK OF A CERTIFIED PUBLIC ACCOUNTANT, YOUR MIND GOES STRAIGHT TO THE IMAGE OF SOMEONE PUNCHING NUMBERS into an adding machine in a dimly lit office with stacks of paper everywhere. But today’s environment of virtual meetings, electronic information exchange, and collaboration provides a much more accurate picture of the current accounting industry. CPAs use these technological innovations to cultivate a much deeper understanding of tax rules and legislation than the average taxpayer. A professional advisor can analyze how the following items may be applicable to your specific tax situation and help you find potential opportunities for saving time and money. FEDERAL CONSIDERATIONS • Did you know there may still be time to reduce your 2021 tax liability? Individual retirement account and health savings account contributions can be made up until the filing deadline (April 15) for the prior year – and may provide a deduction. • In March 2021, the IRS issued the third round of stimulus checks based on information from the most recently filed tax returns. You may be eligible for additional stimulus payments with your 2021 tax return if your income declined or you can claim additional dependents. • If you received advanced child tax credit payments from the IRS between July and December 2021, that information needs to be reported on your 2021 return and directly impacts the child tax credit you are eligible

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pat erickson, cpa

for in 2021. This was considered an advanced payment of the child tax credit reported on your 2021 income tax return, not an additional stimulus payment. You can deduct up to $300 of certain cash charitable contributions, even if you don’t itemize your deductions in 2021. The amount is double for married taxpayers. A lesser amount was also allowed in 2020 as an abovethe-line deduction without having to itemize. Depending on the type of business and level of involvement, business and rental income may be eligible for a 20% deduction for qualifying business income. Consult a tax professional for advice on the many different considerations for this deduction.

STATE OF WISCONSIN CONSIDERATIONS • When the federal standard deduction increased in 2018, the number of taxpayers who itemize deductions dropped from more than 30% to around 10%. However, Wisconsin allows for an itemized deduction credit for medical expenses, mortgage interest, and gifts to charity – depending on your situation. • The property taxes you pay on your home may qualify you for a school property tax credit of up to $300 annually. If you don’t own a home and instead rent, the rent you pay may also qualify you for this credit. • Contributions to a qualifying 529 plan up to $3,380 if married filing joint and $1,690 if married filing separate could net you a Wisconsin deduction. Contributions above the annual limit carry forward to future years until the amount has been utilized.

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Private school tuition paid for K-12 education may qualify for a Wisconsin deduction. Private schools are not required to provide specific tax documentation for this deduction, so it is easy to miss. Primary school deduction is limited to $4,000; secondary school is limited $10,000. Since the onset of the coronavirus pandemic, many Wisconsin grants have been administered. A large number of these grants are federally taxable but are tax-exempt for Wisconsin purposes. Many Wisconsin taxpayers will be impacted by the tax rate decreasing from 6.27% to 5.3% for income between $32,330 and $355,910 for married taxpayers. Depending on your Wisconsin withholding and exemptions, you may see a higher Wisconsin refund than you are used to. The tax withholding tables have been updated effective Jan. 1, 2022, so you may see a slight increase in your paycheck, but the lower withholding will also impact your 2022 income tax return.

OTHER CONSIDERATIONS You may have questions regarding inheritance, gifting/receiving, or the impact of trusts and estates on your individual income taxes. As the level of complexity to your situation increases, a professional accountant with their ear to the ground in an ever-changing tax landscape can be a wise investment. For more information, contact Pat Erickson, a licensed CPA at CliftonLarsonAllen in Eau Claire, at Pat.Erickson@claconnect.com or (715) 852-1131.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CliftonLarsonAllen) to the reader. For more information, visit CLAconnect.com. CLA exists to create opportunities for our clients, our people, and our communities through our industry-focused wealth advisory, outsourcing, audit, tax, and consulting services. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.

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PROTECT YOUR PIN S TATE OFFERS IDENTIT Y SAFEGUARD FOR FILERS by

wisconsin department of revenue

THE 2022 INDIVIDUAL INCOME TAX FILING SEASON OPENED JAN. 24, and the Wisconsin Department of Revenue is now offering an extra layer of identity protection for taxpayers. The department’s new Wisconsin Identity Protection PIN program is another way it is securing a taxpayer’s personal information. Once a taxpayer requests and receives their Wisconsin Identity Protection PIN, they will use it to securely file their Wisconsin individual income tax return and homestead credit claims. More information on the Identity Protection PIN program may be found by searching “Identity Protection” on the DOR website. “The goal of the PIN program is to keep refunds in the right hands and out of the pockets of fraud-

sters,” said Department of Revenue Secretary Peter Barca. “Another important thing to keep in mind about fraud, is that unless you have contacted us first, we never call people without first sending a letter. So, if you are getting a call or a text from us, but you haven’t received a letter from us, that’s a red flag for fraud. We always send letters first.” The DOR also emphasizes that filing electronically saves time and money, and it increases accuracy and security. Wisconsin processed 3.29 million individual income tax returns in 2021, with an e-file rate of 91%. This is the first time DOR surpassed the 90% milestone for electronically filed returns. Learn more about state tax filing at www.revenue.wi.gov.

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POWER OF ATTORNEY: FOR MONEY, FOR HEALTH WHAT ’S THE DIFFERENCE BE T WEEN A HE ALTHCARE AND FINANCIAL POWER OF AT T ORNE Y? words by

Aging & Disability Resource Center of Eau Claire County

“POWER OF ATTORNEY” SOUNDS SIGNIFICANT AND COMPLEX, BUT IT DOESN’T HAVE TO BE. Designating this power to a trusted spouse, family member, or friend is essential to making sure your interests are protected in the case of severe disability or deterioration of mental function.

HEALTH CARE

FINANCIAL

WHAT IS IT?

A health care power of attorney document makes it possible for adults in Wisconsin to authorize other individuals (called health care agents) to make health care decisions on their behalf only if they are no longer able to so.

A financial power of attorney document authorizes another person (called an agent or attorney-in-fact) to handle the financial affairs of the person creating the document (called the principal).

HOW DOES IT HELP ME?

This is an extremely important pre-planning tool to allow you to set out some of your wishes and pick your own decision-maker. If you do not have this document and need someone to make decisions on your behalf, a costly guardianship will have to be pursued in court. Having a proper power of attorney for health care can prevent the need for guardianship and save your family money.

This is an important pre-planning tool to allow you choose a person you trust to handle your financial affairs. If you do not have this document or other suitable arrangements made (e.g., a trust or the appointment of a representative payee), a Guardian of the Estate must be appointed if the principal loses the mental ability to make financial decisions.

WHO NEEDS ONE?

Everyone over the age of 18. Loss of ability to make health care decisions can happen at any age; likelihood increases with age or illness.

Everyone over the age of 18. Loss of ability to handle financial affairs can happen at any age; likelihood increases with age or illness.

WHEN DOES IT GO INTO EFFECT?

Only when you are no longer able to make complex medical decisions by reason of “incapacity.” Incapacity means two doctors have examined you and determined that either temporarily or permanently you are not able to make your medical decisions. This is when the document is activated. Note: It can also be deactivated if you regain your abilities.

It is effective immediately unless otherwise specified. It must be “durable,” meaning your agent has the authority to act on your behalf even if you become temporarily or permanently unable to make your own decisions. The current statutory state form for a power of attorney for finance is automatically durable.

WHAT DOES IT COST?

FREE! An attorney can also complete the document, but they will charge a fee. It does not need to be notarized, but it must be witnessed at the same time you sign it by two non-family adults who are not providing health care to you.

FREE! An attorney can also complete the document, but they will charge a fee. It does need to be notarized at the time you sign it.

Keep the original for yourself in an easily-accessible location. Provide a copy to each of the “agents” and your doctor’s office and/or hospital.

Keep the original for yourself in an easily-accessible location. Provide a copy to each of the “agents” so they can provide this to financial institutions upon request.

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ADRC does not provide this form • gwaar.org/guardianship-resources • www.dhs.wisconsin.gov/forms/advdirectives/ adformspoa.htm

WHO SHOULD HAVE A COPY?

WHERE CAN I GET THE FORMS?

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Aging & Disability Resource Center gwaar.org/guardianship-resources www.dhs.wisconsin.gov/forms/advdirectives/ adformspoa.htm

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